tv Cavuto on Business FOX News July 7, 2012 10:30am-11:00am EDT
these days. >> might want to be careful-- >> and to express this little faith in american citizens, they go out and knock ambition and denigrate success, it's ridiculous. >> i thought the audience was stepford audience. >> neil: look at the crowd behind him they look delighted to be there. adam, you're looking this, hearing this, watching this, i mean, you must even be saying, come on, enough of this? >> well, neil, i'm delighted to be here, just to say, just to get that out here. no, i understand your point, but i don't agree at all. i mean, i listen to what he said. i read what he said. all of what he said, by the way and i think, first of all, this is politics. he's hitting the private equity crowd and hit being mitt romney. i don't agree with all the criticisms of private equity pt what he's saying the so-called job creators, that's true. they are interested in doing what's right for their investors. sometimes that helps create jobs in the u.s., sometimes it
doesn't. that's the political point. >> more than sometimes, more than sometimes, adam. come on, you know it's more than sometimes. >> no, i don't know. >> oh, see, are you telling me that you, in all your great research, have found that private equity is a net job killer? not a net job creator? >> i'm saying that creating jobs in the united states in some sort of-- in some jurisdiction is not the job of a private equity investors and that isn't what i would want them to do. >> no, you're a business reporter. >> i agree that investing in education and infrastructure, what we should be doing, nothing objectionable. >> adam, you and you cover this stuff, to are a long time. this is a pretty simple question, do they create jobs or kill jobs? based on my research, they create a lot more jobs, what are you saying? >> yeah, but charlie, we could have the same debate about, you know, do firefighters or police forces create jobs. >> no, we can't. >> or-- >> i think that there serves
as a reminder, what maybe the administration really wants. to argue over this very point and miss the point that whether private jobs or not. we're not getting them. not getting them, the latest quarter is running about a third the pace we were in the first quarter and it jets up big worries for this quarter and the final quarter. >> and big worries for the white house. i disagree, adam saying this is political. it's not. this is the economic policy for this white house, that government knows better and elected officials know better than people who have run private companies and our national debt now as the percentage held by the public is, at the end of the year will be 70%, in '08, it was 40%, and so, where is that moan going? not to create jobs, because we still have an unmroment rate of 8.2%, 1 percentage point lower, 1.1 percentage point lower than in february of '09.
>> this has to be a class argument or even the end of the week, the administration was arguing that it was-- i do think, charles, we have to get back to the idea that jobs are just not paralyzing. you can argue whether that's a class argument or not. it's a basic economic fact argument. the jobs aren't materializing and the unemployment rate is staying stubbornly high and the inflation rate is stubbornly high and that's a real worry. we have factory orders back to where they were, in the height of the recession and we have the services sector looking at numbers that were just after the recession, and syme, this is not good. >> we're going backwards, so doubt about it. and i don't, biden, you know, this is not about, by the way, private equity. when i think job creators, i'm thinking of husband and wife owing a lawn mowing service and 12 employees, those are the people that created jobs and i think the policies and the threat from the administration have held back these kind of people. and i think the obama care--
>> it's not-- but it is part of the big line, they're trying to say, trying to blame what's going on. >> no doubt. >> on the private sector, maybe so. >> you blame them, but you punish everyone. the obama tax thing on dividends doesn't just hit very rich people. you have $250 grand, it's a smoke screen. >> it hurts people that are investing in a private economy. i think what you're seeing here is attack on the private economy, relentless and journalists, not holding them accountable for the simple fact, i tell you, this is where i'm at odds with adam. do private equity, the notion that private money goes into the companies, did it cost jobs in the long run or hurt jobs. caused or created jobs? i'm telling you, it's created more jobs and people like you say that. >> the undercurrent seems to be, too, that you don't get the kind of out there front and center is that if you would just, if it let us spend more money than the
unemployment rate-- >> here is what's going on here. i do want you to address this, because here is what i see in my simple mind. i see the blame game continuing in a more artful form, the reason we're not seeing more private sector gains because the private sector guys are running this and then it's fox, materialized as class warfare, we're 42 months into an administration that is still busy blaming the other guy. still blaming private equity folks and blaming anyone, but itself. and i think there-in lies the rub, that voters are getting rubbed the wrong way. >> well, we can either-- i agree with you, neil. we can either play their game or our game i would say-- >> well, it's not a game. tell you the truth, i could tell people the weight thing is a thyroid issue, it's not i love burger king. it's not a thyroid issue it's burger king. why doesn't the administration
say we've had 42 months to get this together and get it moving, the needle is not moving, if anything, it's going in reverse, we can't blame private equity boards and they're not so sinister, and we have to start taking responsibility for this. a lot of the americans critical of the administration at least on that point tip of the hate and way to go, finally you're waking up to the obvious. >> i think you give the voters far too much credit to suggest that. if you show any weakness in politics or in in i other game. >> i don't believe, i don't believe. john kennedy and he admitted after the pay bay of pigs, his popularity shot up in days. you think that americans are stupid and you think that they will say, this is all political, and they're a lot smarter than you think. a shot more than you think. >> i want to make one point, we always give too much credit to the president when times are good and blame the president too much when times are bad. >> neil: absolutely, absolutely.
just like you did with the last, when times were bad to say he was all, but hitler incarna incarnate. i'm telling you this one has to sit up and smell the coffee, and admit putting it on the stove. >> and the problem is they don't believe they're responsible for this. they believe it's everybody else's falls and problem. >> the more frightening thing. how about this is the outcome that the president is being looking for. >> oh, oh, you bring down the top-- >> i don't know where you're going there and 'cause now you're getting crazy bill. again, again, again, it's not a thyroid issue although the camera does add 50 pounds. and when we come back, part of the problem in paradise, a town in california going bust and filing bankrupt. some are saying it's actually a good thing. ♪
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>> hi, everybody, ear we live interest america's news headquarters, i'm jamie colby. there is a scorching heatwave gripping much of our nation today and it's making its way right now to the northeast. the temperatures are 100 or higher and are expected in cities, including philadelphia and new york, already, heat warnings and watches in effect all over the heartland and at least 46 deaths are reported so far, the most seen in virginia, maryland and illinois. right now, california lawmakers, approved funding for the first high speed rail line that will eventually connect san francisco to a total cost of 68 billion dollars. california governor jerry brown say it will provide an equal way of transportation and others are not so keen, saying it's a huge strain on taxpayers, especially as california faces the biggest budget deficit in any state in this country. i'm jamie colby, back to cavuto on business.
>> all right. you think you can't get any worse for local budgets, you might want to think again to mammoth lake, california. slammed with 43 million dollars in debt less than a week after its neighbor stockton, california did the same thing. and both are part of a growing trend of municipalities filing bankruptcy under crippling debt. charles payne actually sees it as a good thing. explain. >> it the worst case scenario, but it's a good thing, the only way to break up a lot of obligations by both sides of the aisle and you can't base pensions off people retiring at 50, double dipping, and you think you're going to make 8% a year. i mean, all of it was completely outlandish and now-- >> now they're abrogating the contracts. >> there's no choice. some of these towns have no police and telling the people listen, unless it's in in progress crime, don't call us.
>> municipal bankruptcy is a messy process, i've covered a lot of them and covered orange county, a big county, bankruptcy over derivative trade and there are some residual affects. >> it's not good. i don't think that municipalities should go into bankruptcy. >> neil: what about charles' point, you don't have a choice. >> you have a choice, you can negotiate with the unions. >> neil: they're not they don't budge and they don't want to-- >> suppose they stop paying them, i don't know. there's got to be he ways before you hit the bankruptcy button and stiff your bondholders. and new york city is still paying for the fact that it stiffed bondholders, he think, there were short-term notes in '76 or '77, and in terms of lower bond ratings. >> and the municipality is looking awesome. california municipal bontdz best performing categories in muny bonds better than the national average for muny
bonds. number one. number two, in san jose cutting government pensions, that's great news. and we have new government accounting standards going into place where the municipalities, these localities are going to have to accurately, more accurate ily account for the shortfalls in the mention and people are going to wake up, all of this is good news. >> neil: i can see gasperino's point on this one. one they think i want to raise for you, adam, it might be the only option, they've talked to their public unions and creditors, neither side seems to budge so they're left with the government, and argentina, there was a stigma that lasted for decades and obviously, the country came around and no longer the financial pariah, it was, but it does take a while and there's a scarlet letter on you, even as he said in the case of new york city, exists to this day. so, you do have to be aware of that risk, right? >> well, sure.
as well as there should be a stigma, they screwed up and it's a good reminder to investors just because it's a municipality or a state or a country, doesn't mean it's a safe investment. that's why there's a yield associated with it. there's a risk and i happy to agree with charles and dagen, charles made a wonderful case for the general motors controlled bankruptcy by the way. >> neil: which charles are you talking about? >> and that's exactly the way that bankruptcy is supposed to work. >> neil: which charles, payne or gasperino. >> payne, payne. >> neil: not you, gasperino. >> i don't remember mentioning gm. >> don't agree with gasperino. so, payne. and you say, we're going to have more pain if we don't do this stuff, right? as tough as this is, ridiculous as it is, and it's a hell of a way to get your books in order, but might be the only way to gets books in order. what if it leads to a cascade of countless states, municipalities, doing the same thing? >> that's the point, i think that dagen brought it up. when people pick up the newspaper, wow, the town down the road filed for bankruptcy
they start to wake up. maybe chicago will get its act together and philadelphia. >> you don't have to go to bankruptcy to get your act together. new york city-- >> got to be the best negotiator in the world because these guys-- >> i don't believe that new york say, they defaulted on-- they missed payments on the short-term notes in the '70s, and i do not believe they went into bankruptcy. what did they do? >> because they wanted help from washington and told him to drop dead. >> they still got help. >> and talk about it repeatedly on the program. voter referendums in california the most important sector. >> two issues here, i think you try to avoid bankruptcy and debate-- point out one thing about california, why are california bonds up? a technical factor here, taxes are high and going up, so, buy municipal bonds they're triple tax and that's one of the reasons why muny bonds prices are going up, not necessarily that california is going to get its act together. >> you're not going to buy
them, if you think the state is going to blow up. >> and where do you put them. treasury. >> and you don't lose it. >> and hotels, and charlie gasperino, that's not what they're buying, who are the fat cats, exposing hypocrisy at the top of the hour. and where there's a will or a way, and so many banks did this week, some are saying, part two of too big to fail, could be too big to ignore. ♪
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>> you've heard of living wills and now some of the largest banks on the planet have living wills for them. their just in case plan for the next financial meltdown, god forbid. if everything hits the fan, banks can hit back with a plan to avoid another bailout. all part of that dodd frank regulation law. charlie gasperino has his doubts. what are you nervous about here? >> i'm nervous, this is just baloney. and let's be honest here. the six big banks control in the u.s., they control something like, you know, 60% of the financial assets and i think, i think that's globally. and are we really, there's, i believe, it's impossible to create an orderly wind down of citigroup, which has 800 billion dollars of customer deposits that by the way are insured. i think jp morgan has had a trillion dollars of customer-- >> and i say meltdown, to
bring people up to speed. if everything hits the fan, there's an orderly way it sell off assets, that would assume there's buyers for the assets, in a meltdown it's like catching a falling knife and that begs the question, that's a disaster so we have to bail them out, right? >> unfortunately, that's where we are, and i'm nervous, but probably more angry, we did the tarp thing and hearing how great it was and here we are at the same banks are larger, more threatening to our economy, they're not lending, they're still marketing soassets to whatever they think the value should be. i don't think we've gotten any tracking, and the sword has gotten closer to our throats. >> and this has given dodd frank cover, the financial reform law. >> let me finish it. part of dodd frank is it to get rid of too big to fail, that's what they say it's written in law, it's not.
>> neil: you mean too big to fail still lives. >> of course, they're not going to let citigroup go under. >> i agree that too big to fail lives, but playing the-- exposing the plans that say this what is they'll do. >> are you insane? >> i mean, you can't go back and try harder. >> that's good. >> adam, do you think you can orderly unwind jp morgan? they have a hiccup and lose 2 billion dollarsments rather talk now. >> and there's no way, they're too big. >> neil: let me ask you this, when you're an organ donor on your license it says you're an organ donor or do not resuscitate. there's nothing in this plan that is stamped on bank of america -- there's nothing in bank of america that says do not resuscitate, so, i guess there are no guarantees that they're beyond being resuscitated being a taxpayer.
so this is not worth the paper-- >> it's not worth anything because in a financial crisis, number one, we'll never see the next one coming and number two, no willing buyers for any of these assets in a crisis situation, we've bailed them out before. they're going to expect a bailout again. >> do you agree with charlie? >> unfortunately, i do agree with him. >> i don't like it, it makes me feel yucky. >> there is no way, there is no way you could orderly unwind 3 trillion dollars and that's the balance sheet, i believe, of jp morgan. >> he wasn't listening, clearly. >> neil: taking the over and under on which organs would be donated by the banks. charlie and dagen, thank you very much. >> that's the question. >> neil: not going to go there. up next, american companies laying it on the line next week and letting investors know about their bottom lines, the names ready to lift your bottom lines when they do.
like? >> genesco. and i think it is resistant. >> interesting. adam, what about you? >> bethnol. it makes fasteners and not as cheap as charl's pick but it up a bit. >> adam how do you think the quarter will look. network decent but not great. i am worried. and only ben bernanke can save the day now. >> well, you think high taxes don't drive away jobs? look at what is happening to thousands of wall street jobs reportedly fleeing new york city taxs and thousands of former residents of maryland are moving next door to live in virginia where taxes are lower. is this proof that dc needs to cut taxes to create job in all of the united states?
i am david asbin welcome to forbes on fox. we'll go in focus with steve, and virginia and john and mark. steve, the job's number was pathetic. could tax cuts get us moving in the right direction. every time we have substantial reduction in taxes it workings. john kennedy understood it and ronald reagan understood . the bottom line is when you raise. and lower the price you get more of them. maybe we should do it for the whole united states. >> we have lowered taxs and there is no real relationship between tax rates and job creation. i urge